Eton Pharmaceuticals, Inc. (NASDAQ:ETON) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Eton Pharmaceuticals, Inc., a specialty pharmaceutical company, focuses on developing and commercializing pharmaceutical products for rare diseases. With the latest financial year loss of US$28m and a trailing-twelve-month loss of US$11m, the US$123m market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Eton Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Eton Pharmaceuticals

Expectations from some of the American Pharmaceuticals analysts is that Eton Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$8.5m in 2021. The company is therefore projected to breakeven around 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 125% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Eton Pharmaceuticals' upcoming projects, though, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 33% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Eton Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Eton Pharmaceuticals' company page on Simply Wall St. We've also put together a list of key aspects you should further research:

1. Historical Track Record: What has Eton Pharmaceuticals' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Eton Pharmaceuticals' board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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